NEW YORK: Shares of salad chain Sweetgreen fell 15% in premarket trading on Friday after the company lowered its annual same-store sales forecast, citing weaker consumer demand amid growing concerns over a widespread cyclosporiasis outbreak in the United States.
Cyclospora infections have reached record levels in the US this year, with the current outbreak considered one of the largest recent foodborne illness outbreaks. The infection can spread through contaminated food or water, particularly raw fruits and vegetables, and may cause symptoms including diarrhea, nausea and other gastrointestinal problems.
The outbreak has been linked to recalled iceberg lettuce from central Mexico, prompting some consumers to reduce their consumption of lettuce and avoid restaurants that rely heavily on fresh produce.
Sweetgreen has stressed that iceberg lettuce is not used anywhere on its menu and said it has received no information from health authorities or suppliers indicating that the company is connected to the outbreak.
Despite that, concerns about food safety have affected customer demand. Sweetgreen now expects annual same-store sales to decline between 7% and 8%, compared with its previous forecast of a 2% to 4% decline.
The company said the revised outlook reflects a significant drop in consumer demand beginning in mid-July as news about the cyclospora outbreak spread.
For the second quarter ended June 28, Sweetgreen reported a 6.2% decline in same-store sales, marking the sixth consecutive quarterly decline. However, the figure represented an improvement from the 7.6% decline recorded during the same period a year earlier.
Chief Financial Officer Jamie McConnell said the company had been seeing improving momentum before concerns surrounding the outbreak disrupted sales in July.
According to McConnell, the impact of the outbreak-related concerns reduced July comparable sales by approximately 600 basis points. She acknowledged that the timing of a full recovery remains uncertain but said the company remains confident it can rebuild sales momentum.
Sweetgreen’s shares have now fallen nearly 30% since mid-July, when concerns over the cyclospora outbreak began weighing on restaurant companies that depend heavily on fresh produce.
The company continues to monitor developments surrounding the outbreak and has maintained that there is currently no evidence connecting its food supply or operations to the reported infections.
